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[2019] ZALCJHB 331
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National Union of Metalworkers of South Africa v Transnet (SOC) Limited and Others (J3319/17) [2019] ZALCJHB 331; [2020] 3 BLLR 327 (LC); (2020) 41 ILJ 1977 (LC) (29 November 2019)

IN
THE LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG
Not reportable
Case No: J 3319/17
In the matter between:
NATIONAL UNION OF
METALWORKERS
OF SOUTH
AFRICA

Applicant
and
TRANSNET (SOC)
LIMITED

First Respondent
SOUTH AFRICAN
TRANSPORT AND
ALLIED WORKERS
UNION

Second Respondent
UNITED NATIONAL
TRANSPORT UNION

Third Respondent
TRANSNET BARGAINING
COUNCIL

Fourth Respondent
Delivered:
29 November 2019
JUDGMENT
TLHOTLHALEMAJE,
J
Introduction
:
[1]
The
applicant (NUMSA) approached this Court in terms of the provisions of
section 158(1)(vi) read with section 158(1)(j) of the
Labour
Relations Act (LRA)
[1]
to seek
declaratory orders that the agency shop agreement concluded between
the first, second and third respondent is unlawful
and invalid for
want of compliance with the provisions of section 25(2) of the LRA;
any deductions of agency fees from its members
as a result of the
agreement to be unlawful; directing the first respondent to refrain
from deducting agency fees from its members,
and ordering the first
to third respondents to repay the agency fees already deducted from
its members between May 2017 to
date, plus interest thereon.
[2]
The first respondent, (Transnet (SOC) LTD), and the third respondent,
United National Transport Union (UNTU) opposed this application.
Background:
The
Agency Shop Agreement:
[3]
On or about
15 May 2017, Transnet, SATAWU and UNTU entered into an
agency shop agreement which is envisaged to bind all
the employees,
including members of other registered trade unions other than the
representative
unions
within the Transnet Group.
[2]
Under clause 1 of the agency shop agreement, its purpose was to
replace
Annexure
E
of
the Recognition Agreement entered into between Transnet, SATAWU and
UNTU in November 2016.
[4]
The agency
shop agreement contemplated an agency fee to be levied against the
salaries of
affected
employees
[3]
.
Affected
employees
[4]
are defined as ‘
employees
who are eligible to be members of the trade unions which is party to
the agency agreement, but are nevertheless not members
of the
representative union
’.
[5]
A
Representative Union
is defined in the agency shop as ‘
trade
union parties that meet the threshold of recognition in terms of the
Recognition Agreement’
.
Clause 2.16
of Recognition Agreement in turn defines
representative union
as a union that ‘
complies with the threshold requirements of
25% (twenty five percent) paid up membership of employees in the
bargaining unit
across the whole of Transnet.
[6]
Clause 2.2 of the recognition agreement defines a
bargaining unit
to mean all permanent and fixed-term contracts employees who fall
within the salary scales L – G. The agreement further defines

the operating divisions of Transnet to include Transnet Pipeline,
Port Terminals, Freight Rail, Engineering, Group Capital, Corporate

Centre and Property.
[7]
The significance of reference to ‘
bargaining
unit’
will become clearer in this
judgment, as it is central to the question of the validity of the
agency shop agreement.
[8]
Under
clause 5 of the recognition agreement, Transnet recognises and
accords ‘
representative
union’
the rights to deduct union subscription from the employees’
wages, in accordance with section 13 and 25 of the LRA
[5]
.
[9]
Clause 2.25 of the recognition agreement defines a ‘
workplace’
as a ‘
workplace as defined in the
Labour Relations Act 66 of
1995
, as amended from time to time. For the purpose of this
agreement, Transnet shall be regarded as the workplace’
.
The
dispute:
[10]
On 11 December 2017, NUMSA’s attorneys of record
(Cheadle Thompson &
Haysom Inc.) addressed correspondence to
Transnet and recorded the following;
10.1
The agency shop agreement entered into with SATAWU and UNTU defined a
‘
representative union’
as the ‘
trade
union parties that meet the threshold of recognition in terms of the
recognition agreement
”.
10.2
The recognition agreement defined a representative trade union that
has 25% of paid up membership
in the
bargaining unit
of
Transnet across the whole of Transnet including its operating
divisions and internal operations.
10.3
As a result of the agreement, Transnet had been deducting agency fees
from NUMSA’s members
since May 2017 to date.
10.4
In terms of
section 25(2)
of the LRA the definition of a
representative union includes a registered trade union, or two or
more registered trade unions acting
jointly, whose members are a
majority of the employees employed by an employer in a workplace.
10.5
Accordingly, the agreement did not comply with the requirements of
section 25(2)
of the LRA, and was therefore unlawful and invalid.
Consequently, all agency fees deducted from members of NUMSA were
unlawful.
10.6
NUMSA
sought an undertaking from Transnet that it would refund the agency
fees unlawfully deducted since May 2017 to date and
refraining
from making any further deductions
[6]
.
[11]
Transnet’s response by way of an email on 18 December 2017
was that notwithstanding
the definition of ‘representative
union’ in the agency shop agreement (which referenced to the
recognition agreement),
the agreement did in fact comply with the
provisions of
section 25(2)
of the LRA on the basis that the
recognised unions, acting jointly, represented the majority employees
in the workplace and not
in the bargaining unit. To that end, the
agency shop was not unlawful and invalid, and the agency fees
deducted in terms thereof
were lawful.
[12]
NUMSA’s contentions in these proceedings is that the agency
shop agreement read with
the recognition agreement fell short of the
requirements of the provisions of
section 25(2)
of the LRA, in that,
the recognition agreement only required the majority membership in a
bargaining unit
while the provisions of
section 25
of the LRA
required the majority membership in the
workplace
and in that
respect, the agency shop agreement was in conflict with the
provisions of
section 25
of the LRA, and was thus unlawful and void.
[13]
In opposing the application, Transnet contends that;
13.1
During 15 May 2017, its workforce consisted of 52 956
employees inside and outside
of the bargaining unit. 26 107 (or
49%) of those employees were members of UNTU and a further 16 300
(or 30%) were members
of SATAWU.
13.2
At the conclusion of the agency shop agreement, UNTU and SATAWU had
more than the 50% plus one
threshold as required in terms of the
provisions of
section 25(2)
of the LRA.
13.3
The objective facts in this case were that UNTU and SATAWU not only
represented the majority
of the employees in the
bargaining unit,
but also represented the majority of employees in the
workplace
.
13.4
The term
bargaining unit
in the recognition agreement was
erroneously inserted, but that error did not necessarily render the
agency shop agreement void.
13.5
Central to NUMSA’s application was whether the substantive
requirements of
section 25(1)
of the LRA had been met, with the
enquiry being whether UNTU and SATAWU factually represented the
majority of the employees in
the workplace.
13.6
The objective facts of this dispute revealed that UNTU and SATAWU
represented the majority of
employees in the
workplace
and
therefore by implication, there was compliance with the requirements
of
section 25(2)
of the LRA notwithstanding, the
patent error
in the recognition agreement.
13.7
The
representative
scheme of the provisions of
section 25(1)
of the LRA was aimed at circumventing non-unionised employees from
unjustly receiving benefits from the bargaining processes which
they
did not financially contribute towards.
[14]
UNTU in alliance with Transnet denied that the agency shop agreement
did not comply with
the provisions of
section 25(2)
of the LRA,
particularly since the two trade union parties to the agency shop
agreement were in fact the majority unions in both
the
bargaining
unit
and
workplace,
in strict compliance with the
requirements of
section 25(2)
of the LRA. It was argued that the
agency shop agreement replicated all the provisions of
section 25(3)
of the LRA, and that to the extent that reference in the agreement
was made to ‘
bargaining unit’
instead of
‘
workplace’
, this was in error, which in any
event, has since been corrected by way of an amendment to the
agreement, and NUMSA had not challenged
those amendments.
Evaluation:
[15]
Section 25
of the LRA provides:
(1)
A representative trade union and an employer or employers’
organisation
may conclude a collective agreement, to be known as an
agency shop agreement, requiring the employer to deduct an agreed
agency
fee from the wages of employees identified in the agreement
who are not members of the trade union but are eligible for
membership
thereof.
(2)
For the purposes of this section, representative trade union means a
registered
trade union, or two or more registered trade unions acting
jointly, whose members are a majority of the employees employed -
(a) by an employer in a
workplace; or
(b)
by the members of an employers’ organisation in a sector and
area
in respect of which the agency shop agreement applies.
(3)
An agency shop agreement is binding only if it provides that -
(a)
employees who are not members of the representative trade union are
not
compelled to become members of that trade union;
(b)
the agreed agency fee must be equivalent to, or less than-
(i)
the amount of the subscription payable by the members of the
representative
trade union;
(ii)
if the subscription of the representative trade union is calculated
as
a percentage of an employee’s salary, that percentage; or
(iii)
if there are two or more registered trade unions party to the
agreement,
the highest amount of the subscription that would apply to
an employee;
[16]
As it was correctly pointed out on behalf of the applicants, an
agency shop is an extraordinary
form of contract in terms of which an
employer agrees with a third party to make deductions from an
employee’s salary for
the benefit of the third party with whom
the employee has no relationship.
[17]
Recently,
the Labour Appeal Court reiterated in
Solidarity
obo Members employed in Motor Industry v Automobile Manufacturers
Employers Organisation (AMEO) and Others
[7]
(Solidarity)
,
that
agency
shop agreements are less intrusive than closed shop agreements which
compel employees to be members of majority trade unions,
and do not
compel membership of the union, but only required employees who
benefitted from the fruits of collective bargaining
achieved by the
majority union to pay an agency fee.
[18]
It
is in the light of this peculiar nature of such agreements that the
principle that such agreements are
binding only if they comply with all the requirements of
section
25(3)
of the LRA as reiterated in
Greathead
v SA Commercial Catering and Allied Workers Union
[8]
should be appreciated.
[19]
The dispute in this case however turns on the
consequences of the definition of ‘
representative
union’
in the recognition
agreement, which definition was referenced in the agency shop
agreement. Aligned to this issue is that of the
subsequent amendments
made to the agency shop agreement by Transnet, SATAWU and UNTU, and
the legal effect of that amendment in
relation to the relief that
NUMSA seeks.
[20]
It is significant to note that NUMSA’s application was filed
and delivered on 8 January 2018.
In its answering affidavit
filed and served on 17 January 2019, Transnet acknowledged
that the agency shop made reference
to representativeness threshold
which was based on an agreed bargaining unit and threshold, and
averred that it was initiating
the necessary steps to amend the
wording of the agency shop so as to bring it in line with
section 25
of the LRA.
[21]
On 28 February 2019, some few days prior to the hearing of
the application, Transnet
filed and served a supplementary affidavit,
in which it averred that the process embarked upon of amending the
wording of the agency
shop agreement so as to bring it in line with
the provisions of
section 25
of the LRA had taken place and was
concluded. A copy of an amended agency shop agreement agreed upon
with SATAWU and UNTU and signed
on 14 February 2019 was
attached to the affidavit. In the amended agreement, the definition
clause 3.9 of the original
agreement is amended to read;
“
Representative
Trade Union – For the purposes of this agreement means a
registered trade union, two or more trade unions acting
jointly,
whose members are the majority of employees employed by Transnet in
the workplace”
[22]
Mr Orr on
behalf of NUMSA had submitted that the fact that the agency shop
agreement was subsequently amended could only be an admission
that it
was invalid in the first place. He further argued that the amendment
was in any event not before this Court, and that even
if it were, in
the absence of strict compliance with the provisions of
section 25
,
the initial agreement was invalid
ab
initio
.
This contention was premised on the authority of
Greathea
d,
wherein it was held that a rectification could not cure an agreement
that was void for want of compliance with statutory formalities
[9]
.
It was further argued that even though
Greathead
dealt with the requirements set out in
section 25(3)
of the LRA, its
reasoning was applicable to the entire provisions of
section 25
of
the LRA.
[23]
Mr Hutchinson for NTU submitted that NUMSA’s case was merely
based on incorrect use
of terminology in the agreement, and that to
the extent that the agreement has since been amended, which amendment
NUMSA had not
challenged, there was no basis for the relief sought to
be granted.
[24]
The
submissions made by Mr Maserumule on behalf of Transnet were that to
the extent that SATAWU and UNTU enjoyed majority membership
of 50%
plus one of all employees at the workplace as contemplated in
section
25(1)
of the LRA, NUMSA’s case must fail. He further submitted
that the erroneous reference to ‘bargaining unit’ in
the
agreement did not render it invalid, particularly since on the
objective common cause facts, all the requirements of
section 25(3)
of the LRA were complied with, and that the facts of this case were
distinguishable to
Greathead
[10]
.
[25]
Mr Maserumule further disputed the contention that the amendment to
the agency shop agreement
was an admission that the agreement was
invalid, and argued that as a matter of fact, the requirements of
section 25(1)
were met, and that the amendment was merely meant to
remove an ambiguity that created the wrongful impression that the
union parties
did not meet the threshold of representativity when in
fact they did.
[26]
The LAC in
Solidarity
[11]
was
confronted with an almost similar scenario, where in the face of the
validity of a collective agreement being challenged (for

non-compliance with
section 25(3)
of the LRA), an amendment was made
to that agreement. In this case, and as correctly pointed out on
behalf of UNTU, the amended
agreement was not challenged as at the
hearing of this application, and there is clearly no basis for any
conclusion to be reached
that it is not properly before the Court.
[27]
A
second consideration is that in line with
Solidarity
,
it can be accepted that the agency shop agreement was amended to
ensure the correct wording as required in the provisions of
section
25(2)(a)
of the LRA in particular. In
Solidarity
,
it was stated that there is no express statutory prohibition on the
retrospective operation of collective agreements, and as such,
it is
possible for the parties to a collective agreement to make it
applicable from a date earlier than its conclusion. This is
so in
that although imposing reasonable limitations on other rights,
retroactive operation will promote the purpose of orderly
collective
bargaining
[12]
.
[28]
Whether the amended agency shop agreement
has retrospective effect needs to be gleaned from its wording. The
amended version does
not make any reference to retrospectivity, as
its effective date is from ‘the date on which the last signing
party signs
the agreement’, which in this case is
14 February 2019. Its purpose as per its clause 1 is ‘to
replace Annexure
E of the Transnet Recognition Agreement entered into
on 16 November 2016 and to introduce a new agreement on the
Transnet
Agency Shop Agreement as contemplated in
section 25
of the
LRA’.
[29]
It
is my view that the arguments advanced on behalf of Transnet and UNTU
have merit, whilst those advanced on behalf of NUMSA seek
to elevate
form over substance. The facts in
Greathead
are
clearly distinguishable from those in
casu
.
In
Greathead
,
it was common cause that the impugned
agreement did not expressly provide for the matters referred to in
section 25(3)(a)
and (c), and was also silent about the requirements
stated in
section 25(3)(d)(i)
and (ii) of the LRA
[13]
.
[30]
In this case however, the common cause
facts are that SATAWU and UNTU enjoyed a majority representation of
50% plus one in both
the bargaining units and the workplace as a
whole, and further that no issues were raised in regard to compliance
with the provisions
of
section 25(3)
of the LRA. There can therefore
be no doubt that the agency shop met all the requirements set out in
section 25
of the LRA, and the only difference and bone of contention
was the reference in the initial agreement to ‘bargaining
unit’,
rather than to ‘workplace’ as contemplated
in
section 25(2)(a)
of the LRA.
[31]
The question that arises then is whether
that omission, which Transnet and UNTU had attributed to a mere error
was of such a nature
that it can be said to have invalidated the
whole agency shop agreement. In other words, can it be said that it
was void
ab initio
in
any event despite the agency shop agreement being substantially
compliant with the provisions of
section 25
of the LRA?
[32]
It is my view that given the common cause
facts, which when objectively considered points to a substantial
compliance with the provisions
of
section 25
of the LRA as a whole,
the error pointed out in the initial agreement cannot be of such a
nature that it can be said that it invalidated
the whole agreement.
To the extent that it was argued that an amendment in line with
Greathead
was
not competent, again, the distinguishing feature in this case is that
the alleged invalidity emanated from the referencing to
‘bargaining
unit’, rather than the wholesale non-compliance with statutory
formalities as was the case in
Greathead
.
The amendment as correctly pointed out on behalf of Transnet, was
merely to correct any ambiguities in the agreement, rather than
to
rectify any glaring non-compliance
per
se
. To this end, the issue of the
amendment in my view, does not take NUMSA’s case any further.
[33]
In summary, I am satisfied that even with the incorrect
referencing to ‘bargaining unit’ in the initial agency
shop
agreement, that agreement cannot be said to have been invalid
ab
initio
for the purposes of the relief that NUMSA seeks. It
therefore follows that NUMSA’s application ought to fail.
[34]
I have further had regard to the requirements of law and
fairness insofar as both UNTU and Transnet sought a costs order.
Given
the facts and circumstances of this case, there is no basis for
any conclusions to be reached that NUMSA’s application ought

not to have come before the Court. The fact that NUMSA was made aware
of the impending amendments to the agency shop agreement
did not on
its own make its case moot, as the issues raised in the application
were indeed important to it and its members,
in the light of the
extraordinary nature of agency shop agreements.
[35]
Accordingly, the following order is made;
Order:
1. The Applicant’s
application is dismissed.
2. There is no order as
to costs.
___________________
E.
Tlhotlhalemaje
Judge
of the Labour Court of South Africa
APPEARANCES:
For
the Applicant:
C Orr, instructed by Cheadle Thompson & Haysom Incorporated
For
the First Respondent:
P. Maserumule of Maserumule Attorneys
For
the Third Respondent:
W Hutchison, instructed by Fluxmans
Incorporated
[1]
Act 66 of 1995 (as amended)
[2]
2.
SCOPE
2.1
This agreement binds:
2.1.1
Transnet as Employer;
2.1.2
All employees of Transnet as Employer who are members of the trade
union parties to
this agreement;
2.1.3
All employees of Transnet as Employer who are not members of trade
parties to this agreement,
but who fall within the registered scope
of the TBC.
[3]
4.
PARTIES TO THE TRANSNET BARGAINING COUNCIL AGREE AS FOLLOWS
:
4.1
The agency fee is an amount equivalent to one percent (1%) of each
affect
employee’s
monthly wages, but not more than
R90.00 per month and not less than R35 per month, as amended and
agreed between the parties from
time to time.
[4]
3.
Definitions
3.1
Affected employee
: means an employee who is not a member of
any one of the trade union parties, and is eligible for membership
of the trade union
3.9
Representative union
: means the trade union parties that meet
the threshold of the recognition agreement in terms of the
recognition agreement
[5]
Organisational
Rights Overview
5.1
Transnet recognises the rights
of a representative union in the manner set out below
5.2
The following
rights apply to a representative union across Transnet irrespective

of whether the union is representative in any particular operating
division:
…
5.2.2
Deduction of union subscription from employees’ wages, in
accordance with section
13 and 25 of the LRA, and on terms and
conditions set out in this agreement.
[6]
Annexure ‘EM3’ to the Founding Affidavit.
[7]
(JA11/17)
[2019] ZALAC 63
(16 October 2019) at para 7
[8]
(2001)
22 ILJ  595 (SCA) at para 8
[9]
Greathead
at
para 9 - 13
[10]
supra
[11]
supra
[12]
At
para 36 - 37
[13]
At
para 8